About to take a new job or negotiating a raise? You may want to read up on the strategies of negotiation and familiarize yourself with a little game theory. The workplace experts at Stack Exchange offer some advice.

When talking about salary negotiation, it's become somewhat conventional wisdom that "the first to give a number loses." That's what Steve Hanov and others say. Is this true?

You're certainly not alone in that belief—there's over 4 million hits on Google for "negotiation theory first offer." The results provide differing viewpoints and a definitive answer is hard to find, as there are many variables influencing the outcome. To name three:

In situations of great ambiguity and uncertainty first offers have a strong anchoring effect—they exert a strong pull throughout the rest of the negotiation.

What that means is that when you make the first offer, the other party tends to forget his or her aspirations, becoming overly influenced by your first offer. The offer shapes the rest of the negotiation.

Advertisement

2) Negotiating salary is typically a win-win type of negotiation. Both parties can and will get what they want, or else no deal will be made. But they can be win-lose if one of the parties is under outside pressure to accept terms that he/she does not find agreeable. If this is the case for the job applicant, then it may not be wise to offer first. Furthermore, Wyche.com says of extroverts:

People who are extroverted do worse in a win-lose negotiations. They tend to be agreeable and to be swayed by the opponent's first offer.

When the other side has much more information than you do about the item to be negotiated or about the relevant market or industry.

This is typically the case in negotiating salary. The employer often, but not always, knows how much they can pay.

So here's what I suggest you do. Explore the same Google search and try the weighted averages method of decision making: Make an inventory of the factors involved in your particular case. Determine if the factor works for or against you making the first offer by assigning it +1 or -1. Then give the factor a weight (how important do you consider that factor?). Finally, multiply these last two and add up the products. The outcome will be <0 or >0.

Then fit your decision to the real-life circumstances. Maybe the employer will offer first, and maybe it will be an offer you're more than happy with.

The basic theory behind "the first to give a number loses," from the job seeker's perspective, is that one might be "leaving money on the table" by naming a salary request. This viewpoint has a deeper root, however, in "positional bargaining," in which the two parties' interests are directly opposed and the relationship is adversarial.

Advertisement

A strict "positional bargaining" strategy, however, is usually not in the best interest of either party to the negotiation. Instead of worrying about who names the first number, do your homework. Determine in advance what your interests are and what you would be willing to accept. The overall package (including benefits, location, type of work, opportunities for advancement, etc.) consists of far more than just salary. Also consider what is typical for hiring someone of your skill level for the type of work you are doing for the type of company in that geographic area. I know that is a lot to consider, but if you do your research, you should be able to arrive at some conclusions.

At that point, you can be prepared for the salary negotiation without worrying about who names the first number. If you are at the point of salary negotiation, the company already wants to hire you. Get on the same side of the metaphorical table—you are not adversaries! You are pursuing a mutually beneficial relationship. Talk about what is fair instead of simply making salary demands. If you can do this effectively, you can show that you are easy to work with while still maintaining your interests. Further, you make the discussion about the issues, not the people, so no one gets offended.

While I find it aggravating that some companies ask for salary history (which is often irrelevant to what is fair). If you have to give it, do so. It really does not change the negotiation if you get on the same side of the table. If the employer is unwilling to negotiate in this manner, you may wish to reconsider whether you want to work for that employer anyway.

Advertisement

With negotiation based on interests rather than positions, naming numbers becomes far less relevant.

Disagree with the answers above? Leave your own answer or submit a comment at the original question. Find more questions like it at The Workplace, a question and answer community for career-related advice. And if you've got your own question that requires a solution, ask. You'll get an answer. (And it's free.)